Policy paper

World Bank 110th Development Committee meeting 2024: UK Governor's statement

Published 25 October 2024

As we gather this week in Washington DC, we thank Minister Al Husseini for his leadership in chairing the Development Committee, and we welcome Minister Elisabeth Svantesson to the role.

We also commend Ajay Banga for his leadership and ambition during his first year as WBG President. Likewise, we congratulate Managing Director Georgieva on her appointment for a second term.

In this 80th year of the Bretton Woods institutions, the IMF and World Bank Group are more important than ever. This Government shares the same mission – to create a world free of poverty, on a liveable planet.

The global challenges are stark. One in 10 of the world’s population are living in extreme poverty. It affects the lives and livelihoods of 700 million people, increasingly in Sub-Saharan Africa and in the most fragile and conflict-affected settings, with many still unable to access basic health, education or sanitation. Too many countries are struggling with high debt levels, paying more in debt repayments than on fundamental health and education.

20% of the global population are at high risk as a result of climate and nature crises, which are compounding poverty and conflict and undermining achievement of the SDGs. Time and again, it is the most vulnerable who bear the brunt of these crises. Alongside this, many middle-income countries face a growing set of global challenges – from pandemics to fragility – and have seen progress stall on delivering prosperity and reducing inequality.

We have also seen conflict intensify. Russia’s illegal invasion of Ukraine and the conflicts in Gaza, Lebanon and the wider Middle East have shown the enormous human and development cost – from food insecurity, to displacement, to climate vulnerability – that conflict carries.

UK support for Ukraine is unwavering. The UK has committed $5 billion in guarantees to support additional World Bank lending. This has supported c$2.5 billion of World Bank loans to date, forming a wider package of fiscal assistance under Ukraine’s Extended Fund Facility arrangement with the IMF. We welcome Ukraine’s steadfast commitment to macroeconomic and financial stability, and their efforts to strike a balance of effort between Ukraine and its partners, as highlighted by the approval of the facility’s fifth review.

We will continue to work in partnership with the Government of Ukraine and the Bank to strengthen the developmental impact of UK guarantees. We welcome the establishment of a new Financial Intermediary Fund for Ukraine, designed to support reform efforts, macroeconomic stability and recovery/reconstruction objectives.

Alongside this, we commend the World Bank’s efforts to increase support to the West Bank and Gaza through an increased transfer of up to $300 million this year. The UK is playing its part through contributions to World Bank Trust Funds focused on infrastructure and economic resilience. We also welcome the Bank’s Rapid Damage and Needs Assessment and Conflict Recovery Framework analysis – these are crucial tools in supporting recovery and reconstruction.

We also welcome the focus on Gender and on Agriculture as flagship themes in these Annual Meetings.

It is a privilege to take part in the Bank’s flagship event on gender. As female politicians we recognise the important role that female leaders play, including in tackling issues that wouldn’t otherwise be addressed. We are also proud that – for the first time – the UK has a female Governor at both the Bank and the IMF.

I commend the Bank on delivering its new Gender Strategy. We must all play our part in ensuring the rapid acceleration of concerted action to drive gender equality and the empowerment of women and girls everywhere. Investing in women and girls and breaking down the barriers they face is critical to prosperity and development. It is at the heart of this government’s mission for delivering inclusive economic growth at home and globally.

Sustainable agriculture and food security must remain key elements of the Bank’s work; an estimated 733 million people faced hunger and undernourishment last year – that’s one out of 11 people in the world. As populations grow and move, diets change, and pressures on already degraded land and natural resources increase, the outlook is unfortunately not optimistic.

The Bank’s response, including its new Global Challenge Programme, is commendable in its focus on nutrition; crisis prevention, preparedness and response, and low-emissions, sustainable food systems. Alongside this, we are pleased to announce £7 million of new support for the Financing for Agricultural Small-and-Medium Enterprises in Africa (FASA) initiative, which will support over 7 million people and 500 agri-SMEs over the next decade.

The Bank’s evolution reforms have already made impressive strides. Under Ajay’s leadership we have seen a coordinated effort towards delivering a Bank that better serves its clients. Management have delivered a new scorecard that ensures a stronger focus on outcomes and impact. Processes have been sped up, to get money where it’s needed faster, with a commitment to cut timelines beyond the current 12 months.

A more comprehensive offer of WBG knowledge will ensure the Bank focuses on what works and delivers impact. We commend the efforts to ensure deeper partnerships including through greater MDB co-financing. Ramping up the use of new tools will also help countries facing related shocks like Hurricanes Beryl and Helene.

In parallel, we recognise the efforts from Management and shareholders to deliver a bigger bank. The UK has stepped up to provide additional shareholder support through our £100 million hybrid capital contribution, while supporting measures to stretch IBRD’s financial capacity by as much as $150 billion over 10 years. We also commend the work of the Private Sector Investment Lab, which supports the Bank’s ambition to unlock greater private finance through innovations such as greater use of new instruments, products and platforms eg more equity investment, local currency finance, and blended finance.

At Chatham House last week, this government committed to delivering a new, modern approach to development, that is based on genuine partnership, trust and respect. That means restoring Britain’s leadership on reform of the global financial system. Last month, at the United Nations General Assembly, our Prime Minister called for a reformed system that delivers a fairer deal for developing countries.

Our mission is to deliver a bigger, better and fairer system, that helps more people, especially in fragile states and conflict zones. We must ensure that all countries can access more and better-quality finance to drive their development ambitions and respond to the climate and nature emergencies. Taking each element of that mission in turn:

More action is needed to embed a better bank. First, we need to accelerate the integration of climate, nature, and development, in recognition that we cannot create a world free of poverty without increasing climate resilience, halting the nature crisis, and accelerating the transition and access to clean energy. The five-year Climate Change Action Plan, due to be refreshed next year, will be critical to ensuring this ambition is implemented across the whole World Bank Group.

Second, the World Bank Group needs to do more to support people in fragile states and conflict zones. We expect nearly 60% of the extreme poor to be in countries affected by fragility and conflict by 2030. We want to see a shift in the Bank’s operating model to better address the underlying causes of fragility and conflict. This means a clear commitment to improve the number and quality of staffing in FCS.

We also want to see more active tracking of, and reporting on, conflict prevention work, so that the Bank can better evaluate its impact. Lastly, we want to see a more systematic approach to implementation through third parties, such as the UN. The refresh of the Bank’s Fragility, Conflict and Violence (FCV) Strategy next year will be an important moment to lock in these commitments.

Third, we must all champion greater gender equality, mainstreaming inclusion and empowerment of women and girls across the International Financial Institutions. We welcome the leadership that the WBG is showing, with a new strategy which is accelerating economic and digital inclusion of women and girls. We must work together to drive forward its implementation, including by tackling global rollback on equality.

The protection and promotion of sexual and reproductive health and rights is a critical part of this work, often fundamental for economic resilience, and must continue to be a strong focus of our collective efforts. We also recognise that there is more we need to do at the Board of these institutions to really represent the women of the world effectively – that is why we support the Governor’s declaration to promote gender equality at the World Bank Board itself.

Fourth, we want to see the new crisis toolkit embedded across the Bank’s operations. That means committing to tracking how the crisis toolkit is being rolled out and how it is deployed at the point of crisis. It also means the rolling out of Crisis Preparedness Gap Analyses to all IDA countries. The UK will continue to champion this agenda – that is why we will channel the coupon from our Hybrid capital contribution into subsidising the fees for Climate Resilient Debt Clauses (CRDCs) to incentivise their uptake.

This is an agenda that both Bretton Woods Institutions must contribute to. That is why we also welcome the package of work by the IMF to ensure the sustainability of lending for its members. Changes to the Poverty Reduction and Growth Trust will mean a bigger and self-sustaining Trust, lending at scale into the future while preserving concessional resources for the most vulnerable countries. Changes to the charges and surcharges of the General Resource Account are expected to lower borrowing costs by around 36%, reduce the number of countries that are subject to surcharge payments, and increase transparency of borrowing costs.

These changes are part of a broader ongoing effort to ensure the IMF’s lending policies remain adaptable to meet the needs of members in the changing global macroeconomic context. The remaining part of the equation is how the Fund supports countries with policy adjustment and achieving stronger programme performance, in a way that addresses structural challenges, allows space for growth-enhancing investments and is acceptable to domestic populations. We look forward to the upcoming review of programme design and conditionality next year which will examine these issues.

We remain concerned about the challenging debt situation facing many developing countries. With low-income country debt repayments at their highest rate in 25 years, high debt servicing is crowding out critical development spending and investment in human capital.  We need to continue to work together to urgently address the underlying drivers of unsustainable debt and pressing liquidity challenges given the high impact that this can have on growth, stability and poverty reduction for affected countries. We welcome continued efforts to support countries undertaking debt restructurings and to address their debt vulnerabilities.

We also want the system to be bigger to meet the scale of the SDGs and of the nature and climate emergencies. This means stretching existing resources further, by taking more risk. The agreement to lower the equity to loan ratio to 18% is a welcome step. We also look forward to an ambitious and fundamental review of the Bank’s Capital Adequacy Framework in 2025. We welcome the introduction of Enhanced Callable Capital and the first phase of changes to IBRD pricing.

Alongside this, action is needed from both shareholders and Management to secure the biggest ever IDA replenishment and ultimately a capital increase for the IBRD, subject to ongoing reforms. The UK has committed to increasing our IDA pledge and we call on everyone to play their part. Alongside this, we will continue to be a leading contributor to international climate finance, including support for nature and forests, backed up with an ambitious NDC at COP29. We ask the WBG to play a leading role in setting a new collective MDB climate finance goal ahead of COP29.

A bigger system also means crowding in more private sector finance, by tapping into the vast quantities of private capital available and channelling it towards the SDG’s financing needs. Innovation and partnership will be key to this, and we look forward to the implementation of innovative risk-sharing approaches like WESP. We look forward to WESP’s first transaction this year, and hope that subsequent transactions will be opened up to other MDBs and DFIs so as to create larger volumes and a genuine new asset class.

Alongside this, we encourage IFC to consider how to scale up in low income and fragile countries, including through private capital mobilisation, while recognising the greater levels of non-financial risk in these contexts. This all needs to be accompanied by efforts to improve the availability, quality and accessibility of data to help investors price risk, lower the cost of capital and unlock investment in EMDEs – through GEMS (Global Emerging Markets Risk database) and more widely.  

Finally, the global financial system will only be sustainable in the long run if we deliver a fairer deal for developing countries and their citizens.

We must work in a coordinated way to close loopholes in the global financial system that fuel illicit finance, resulting in losses of critical resources needed to meet the SDGs and enabling other harms such as kleptocratic forms of governance, and conflict and instability. Of particular importance is taking concrete steps to shine a light on complex corporate structures used to disguise proceeds of corruption and other criminal activity. We also want to see a concerted effort to ensure development finance delivers its intended impact and is not undermined by corrupt interests. We continue to call on the World Bank and IMF to play a stronger role in tackling the ways in which corruption and illicit finance harm development outcomes.

Our approach will also be to forge genuine and equal partnerships delivered by listening to the voices of the Global South and making the system more representative of low income and vulnerable countries. This government wants partnership to be at the heart of all we do. That is why we will make the case not just for fairer outcomes, but fairer representation in how we reach them. The 2024 UN Summit of the Future rightly placed a significant focus on enhancing the voice and representation of those countries. In the World Bank, the forthcoming IBRD shareholding review will be critical in responding to this.

Partnership must also extend to how the MDBs work better as a system, as well as how the IFIs and UN work in more systematic partnership; in this 80th year of Bretton Woods this is more important than ever. It is vital that we collectively respond to the SDG financing challenge at the Fourth International Conference on Financing for Development next year.